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Big Oil Surpasses Production Records Despite Deep Spending Cuts
Confirmed
In Short: Big Oil companies have increased production volumes despite slashing capital expenditures, thanks to technological advancements and strategic shifts.
EY reported that capital expenditure (capex) by the United States’ 30 largest publicly traded exploration and production (E&P) companies fell 49% year over year in 2025, with exploration spending dropping 11% to $4.8 billion, accounting for just 3% of total capital expenditures.
Despite these cuts, oil production by the group hit an all-time high in 2025, with revenue increasing 7%. This success is attributed to drilling efficiency gains, technological advancements, and a strategic shift toward shorter-cycle, high-return assets.
EY’s Matt Melnar noted, “One of the clearest signals in this year’s study is that oil production and reserve replacement are moving in different directions.” He added, “Reserve replacement metrics alone no longer tell the full story. Producers are engaged in a balancing act between production goals, shareholder returns, and long-term portfolio resilience as they make investment decisions.”
Historically, higher production required a linear increase in spending to drill new wells. However, companies have been leaning heavily on their inventories of Drilled but Uncompleted (DUC) wells to maintain production without increasing spending.
The use of AI, machine learning, and predictive analytics has also played a significant role in maximizing production efficiency, cutting operating costs, and extending the lifespan of oil and gas wells.
Deep learning models process large 3D and 4D seismic datasets, combining them with historical drilling logs to map out high-permeability zones with higher precision.
Despite these advancements, EY reported that Big Oil’s oil reserve additions from discoveries and extensions declined 11% year over year, failing to fully replace production volumes for the first time in five years.
OPEC+ agreed to a production boost for September, completing a phased rollback of a 1.65 million barrel-per-day (bpd) supply cut first agreed in 2023. However, the group still produces far below its targets due to the ongoing war.
The group needs to agree on new quotas before deciding on future production strategies, as they assess members' oil production capacity for setting 2027 output baselines that form the basis for quotas.
Additionally, OPEC+ has another layer of production cuts in place, covering most members of the 21-country coalition until the end of 2026.
What this adds
The report highlights the strategic shifts and technological advancements that have allowed Big Oil to maintain production levels despite significant spending cuts.
The Kremlin's Vostok Oil project in the Arctic is crucial for bolstering Russia's presence in the region and sustaining oil production as reserves in more accessible areas deplete.
The sources have not established the exact impact of these production cuts on global oil prices or the long-term sustainability of current production levels.
Background
Big Oil is a colloquial grouping of the world's six or seven largest publicly traded and investor-owned oil and gas companies, also known as supermajors.
What's confirmed
- In August, OPEC+ agreed to its production boost for September, completing a phased rollback of a 1.65 million barrel-per-day (bpd) supply cut first agreed in 2023.
- Despite the agreed production increases, the group still produces far below its targets because of the war.
What's still developing
- But here’s the kicker: oil production by the group hit an all-time high in 2025 while revenue increased 7%, implying that spending less on drilling has hardly hurt their bottomlines.
- We provide what many… For the Kremlin, the giant Vostok Oil project in the frigid Far North is crucial to two goals: bolstering Russia’s presence in the Arctic and keeping production of the key export commodity going as reserves in more accessible parts of the country are depleted.
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